BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 2788|
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THIRD READING
Bill No: AB 2788
Author: Portantino (D)
Amended: 7/15/10 in Senate
Vote: 21
SENATE REVENUE & TAXATION COMMITTEE : 4-0, 8/11/10
AYES: Wolk, Alquist, Ashburn, Padilla
NO VOTE RECORDED: Walters
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : Not relevant
SUBJECT : Sales and use taxes: exemptions: vehicles and
trailers: out-
of-state use
SOURCE : Author
DIGEST : This bill recasts and revises sales and use tax
treatment of trucks, truck tractors, trailers,
semitrailers, trailer coaches, and auxilliary dollies.
ANALYSIS : Existing law provides that when an in-state
retailer sells an item which is subsequently shipped
out-of-state for use outside the state, the sales and use
tax does not apply because the law considers the taxpayer's
use of the item interstate commerce. Taxpayers must ship
the product directly to the purchaser through its own
delivery vehicle, another means it owns, or through a
CONTINUED
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common carrier to enjoy the exemption.
Existing law provides guidance for taxpayers purchasing
specified items for use outside the state:
Revenue and Taxation Code 6388 provided that a non-resident
purchasing a new or remanufactured truck, truck tractor,
semitrailer or trailer or any of which has an unladen
weight of 6,000 pounds or more, a new or remanufactured
trailer coach, or auxiliary dolly, that is manufactured or
remanufactured in this state and purchased from a dealer
outside this state for delivery in the state and for use
exclusively outside this state does not pay the tax if:
? The taxpayer removes the item within 30 days, and
supplies an affidavit that the vehicle has been moved
or driven to a point outside the state within 30 days.
? Supplies an affidavit attesting that the taxpayer
is not a resident of this state and that he or she
purchased the vehicle from a dealer at a specified
location without the state for use outside this state.
? The taxpayer supplies the manufacturer or
remanufacturer written evidence of out-of-state
registration.
R&T Code 6388.5 provides that anyone purchasing only a new
or remanufactured trailer or semitrailer with an unladen
weight of 6,000 pounds or more solely for use exclusively
in interstate, out-of-state, or foreign commerce does not
pay the tax if:
? The taxpayer supplies the manufacturer,
remanufacturer, or dealer written evidence of
out-of-state license and registration for the vehicle.
? Supplies an affidavit attesting that the taxpayer
purchased the vehicle from a dealer at a specified
location for use exclusively outside the state or for
use in interstate or foreign commerce.
To enjoy the exemption, the taxpayer has 30 days from the
date of delivery to remove the item when purchased from an
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out-of-state manufacturer, or 75 days when purchased from a
manufacturer in California. The taxpayer must supply an
affidavit that the vehicle has been moved or driven to a
point outside the state within this deadline.
This bill repeals R&T Code 6388, and consolidates the
protections of the two sections into R&T Code 6388.5 to
state that anyone purchasing a new or remanufactured truck,
truck tractor, semitrailer or trailer any of which has an
unladen weight of less than 6,000 pounds or more, a new or
remanufactured trailer coach, or auxiliary dolly, that is
manufactured or remanufactured anywhere and used inside or
outside the state in interstate or foreign commerce does
not pay the tax if the taxpayer:
? Moves or drives the vehicle out of state within 75
days, and supplies an affidavit that the vehicle has
been moved or driven to a point outside the state
within this deadline.
? Supplies the manufacturer, remanufacturer, or
dealer written evidence of out-of-state license and
registration for the vehicle or an affidavit stating
that registration is not required.
? Supplies an affidavit attesting that the taxpayer
purchased the vehicle from a dealer at a specified
location for use exclusively outside the state or for
use in interstate or foreign commerce.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
SUPPORT : (Verified 8/17/10)
California Trucking Association
Hyundai
OPPOSITION : (Verified 8/17/10)
California Tax Reform Association
ARGUMENTS IN SUPPORT : According to the author's office,
in today's environment, traditional warehousing of goods
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has declined dramatically. Accordingly, businesses are
moving toward Just in Time delivery of many goods and
services and can modify their business practices to take
advantage of the most favorable business conditions. The
trailers, semi trailers and dollies referenced in Section
6388.5 are used exclusively in interstate or foreign
commerce. Thus, the ability to move the vehicles may not
always occur in the very tight timeframes currently
outlined in section 6388.5 of the Revenue and Taxation Code
requiring that the vehicles move out of state within 30
days.
It creates parity, allowing all such vehicles purchased in
California and moved outside of California in 75 days, will
result in increased sales. The state would benefit from
the incidence of increased revenues for California based
businesses generating increased sales. Increased sales in
turn will reflect more revenue to the state as a result in
higher sales figures and give those companies located in
California the ability to hire more employees to support
the increased sales.
DLW:nl 8/17/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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